Dexia Crediop SPA v Comune Di Prato [2017] EWCA Civ 428 (15 June 2017)

Dexia Crediop SPA v Comune Di Prato [2017] EWCA Civ 428 (15 June 2017)

The Court of Appeal held that Prato had capacity under Italian law to enter into the swaps, as the swaps did not constitute 'indebtedness' within the meaning of Article 119 of the Italian Constitution, nor did Article 41 of Law 448/2001 apply because Swap 6 did not involve new debt. The court upheld the trial judge's findings that mandatory rules of Italian law (including Article 30 TUF) applied under Article 3(3) of the Rome Convention, rendering the swaps void for failure to include a seven-day withdrawal right. Both parties had restitutionary claims, which were set off, resulting in a net payment due from Dexia to Prato.

Citation
[2017] EWCA Civ 428
Parties
Appellant: Dexia Crediop S. P. A.; Respondent and Cross Appellant: Comune di Prato
Jurisdiction
England and Wales
Judgment Date
15 June 2017
Procedural Posture
Appeal (civil) / Court of Appeal Judgment on Appeal From High Court (commercial Court)
Outcome
Appeal dismissed; cross-appeal dismissed; judgment of High Court affirmed.
Legal Topics
Interest Rate Swaps, Derivatives, Capacity of Local Authorities, Mandatory Rules Under Rome Convention, Restitution, Financial Regulation, Interpretation of Foreign Law
Banking and Finance Law Conflict of Laws Local Government Law Contract Law Interest Rate Swaps Derivatives Capacity of Local Authorities Mandatory Rules Under Rome Convention +3 more

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Parties

Dexia Crediop S. P. A.

Appellant

Comune di Prato

Respondent and Cross Appellant

Procedural Posture

Appeal (civil) / Court of Appeal Judgment on Appeal From High Court (commercial Court)

Legal Issues

  1. 1 Whether Prato had capacity under Italian law to enter into the swaps
  2. 2 Whether the swaps were void under Article 119 of the Italian Constitution
  3. 3 Whether the swaps were void under Article 41 of Law 448/2001

Ratio Decidendi

The Court of Appeal held that Prato had capacity under Italian law to enter into the swaps, as the swaps did not constitute 'indebtedness' within the meaning of Article 119 of the Italian Constitution, nor did Article 41 of Law 448/2001 apply because Swap 6 did not involve new debt. The court upheld the trial judge's findings that mandatory rules of Italian law (including Article 30 TUF) applied under Article 3(3) of the Rome Convention, rendering the swaps void for failure to include a seven-day withdrawal right. Both parties had restitutionary claims, which were set off, resulting in a net payment due from Dexia to Prato.

Court Disposition

Appeal dismissed; cross-appeal dismissed; judgment of High Court affirmed.

Orders

  • Dexia to pay €327,680.95 to Prato after set-off of restitutionary claims.